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UK Court of Appeal rebukes Home Office for exceeding its powers with bunkum 'national security' GSM gateway ban

Legal saga that began with dodgy prosecution ends in vindication

Updated The Home Office cannot order Ofcom to ignore its legal duties even when a government minister wants to shut something down because of unspecified "national security" concerns, the Court of Appeal has said, ruling that ministers acted outside their legal powers when banning GSM gateways.

The judgment ends a drawn-out saga that began with a dubious criminal prosecution a decade ago and saw several businesses destroyed by the dead hand of bureaucracy, as well as the questionable involvement of a Home Office permanent secretary in an issue well below his paygrade.

Ruling that the Home Office cannot order Ofcom to ignore its statutory duties unless there are "clear words" in law authorising the government department to do so, Lord Justice Flaux said today: "In my judgment there are no such clear words in the present case and, for a number of reasons, section 5(2) [of the Competition Act 2003] cannot be construed as conferring on the Secretary of State the power to give a direction to Ofcom not to comply with one or other of its statutory duties."

Today's ruling upholds a previous judicial review challenge which also found against the Home Office.

Flaux, together with Lord Justice Underhill and Lady Justice Macur, found that the Home Office's arguments in the Court of Appeal were "quite wrong". While the full judgment is full of dense legalese about statutory construction, it boils down to a simple issue: if Parliament hasn't passed a law with words saying "this law overrules other laws", can the government claim that Parliament really intended to say "yes, you can use this to override other laws" whenever it would be handy for ministers?

No, said the Court of Appeal. Without clear words authorising it, the government can't claim some of the laws regulating Ofcom can be used to override other, perhaps more inconvenient laws. And that means a government ban on commercial multi-user gateways (COMUGs) made more than 15 years ago was ultra vires – unlawful – even though a minister claimed the ban was needed for national security reasons.

"Contrary to Mr Beard QC's submission," wrote Lord Justice Flaux as he referred to the Home Office's barrister, "this is not a sub-optimal system of addressing national security concerns... as I have said the remedy is not for the Court to give the words of the relevant statutes a meaning they will not bear, but for Parliament to legislate an appropriate amendment."

What's a COMUG, then?

The Court of Appeal case began when the Home Office and Ofcom decided to appeal against an earlier High Court ruling about COMUGs. These items of commercial-grade telecoms gear were popular in the 1990s and early 2000s when overseas phone calls, especially from mobiles, cost tens of pennies a minute. They worked a bit like VPNs: by disguising the true origin and destination of a phone call, COMUG end-users paid less for their calls than they would if they dialled direct.

COMUGs themselves are banks of SIM cards that reroute inbound calls through one of the SIMs depending on the call's destination. Commercially, they exploit mobile networks' cheap calling deals by bouncing user calls through enough SIMs (thus networks) to ensure that the final cost was less than dialling direct. The COMUG operator then creamed off the difference in the rate charged to the caller.

Both Ofcom and the Home Office were asked to ban these by Britain's main mobile networks. Ofcom declared in the 2000s that COMUGs caused "harmful interference" to the networks. When that method fell apart in later years after EU court rulings legalised COMUGs, the Home Office went out on a limb and said COMUGs were a threat to national security. Spies and eavesdroppers were unable to trace calls passing through COMUGs, claimed not-so-anonymous Home Office lobbyists. Ben Wallace MP, at the time Britain's Security Minister, issued a decree direction banning COMUGs.

Judicial review upheld

That direction was made under section 5(2) of the Communications Act 2003, as The Register reported during the hearing of the case in October. That hearing was an appeal against a judicial review brought last year by the liquidated firm VIP Communications, whose liquidators want compensation for their clients whose businesses were destroyed overnight by the actions of Ofcom and the Home Office.

Jeremy Frost, VIP's joint liquidator, said in a statement today: "This has been a 15-year boxing match between the heaviest of heavyweights and the smallest of flyweights. To add to the case's injustice, the rules have been constantly amended by governing bodies in an attempt to delay victory every time another of the pillars of their argument were removed."

Daniel Mahony, the man targeted for the one and only prosecution ever brought for operating a COMUG, told The Register he was "very happy with the result today".

"There has been a high-level cloak and dagger movement within Ofcom and government to prevent GSM gateways from being used as Parliament intended them to be," said Mahony, continuing:

Ofcom has been on notice for years that it is in breach of its statutory duties, but simply stuck its head in the sand. It is shameful that it took the threat of a Judicial Review in 2016 for them finally to do their job properly. It is even more of a disgrace that the Home Office, especially in the form of Philip Rutnam, carried on unlawfully trying to justify a failure to act in 2003 (when the relevant legislation came into force) despite knowing that I could have been deprived of my liberty.

The Home Office is expected to make a statement this afternoon. Ofcom said: "We are considering the court's judgment, before deciding any next steps."

The only next step would be to appeal to the Supreme Court. If that happens The Register will be present in the cheap seats, as ever, to see what goes down.

Updated at 20.28GMT on 20 November to add:

Following publication of this article, the Home Office sent us a statement:

"We note the Court of Appeal’s conclusion and are considering it.

"We have been clear that the operation of commercial multi-user gateways can have the impact of masking the identities of suspected terrorists and criminals which threatens our national security." ®

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